An empirical study of the European corporate leniency program

Leniency programs are widely used as instruments of competition policy. They are supposed to serve two purposes: in the short-run to facilitate the detection of cartels and thereby to reduce cost of legal enforcement, and in the long-run to deter firms from antitrust abuse. In our empirical study of the 1996 EU Leniency Program, we find evidence indicating that the program provides incentives to reveal information on criminal activities in the sense that agencies are better informed about the cartel conduct than they would be absent the program. Investigation and prosecution becomes faster under the leniency program by about 1.5 years. Finally, we consider sufficient conditions for the destabilizing effect of leniency that regard the number and duration of detected cartels. Our data do not support the view that these conditions are satisfied for this program.